A Bright Future: Australia’s Renewable Energy - EcoGeneration 2011

I would like to acknowledge the traditional owners of the land on which we meet, and pay my respects to their elders past and present.

I am very pleased to be able to join you today. This is an important time for Australia, and for our economy - and of course, by extension, for the clean energy industry and jobs.

I welcome the work of everyone in this room today - people who are thinking strategically about the future and want to harness the opportunities of today and tomorrow.

In my job I have many opportunities to see the innovation that Australians are capable of and the contribution renewable energy can make as a source of energy energy, and to economic growth.

Two months ago, I had the pleasure of visiting the University of Queensland's solar array facility, the largest in the Southern Hemisphere - 25 per cent larger than any other rooftop system in Australia and a facility that will save 1,750 tonnes of carbon pollution each year.

I also launched a solar facility on Magnetic Island which will power up to 22 houses on the Island. The project is part of the Government's Solar Cities program, which funds iconic solar installations to encourage the uptake of solar technologies by raising the community's awareness of solar PV applications. I'm proud to report that as a result of the Solar Cities Program the Magnetic Island community has achieved a 33 per cent reduction in peak electricity demand. The energy savings have delayed the construction of a costly cable to transport electricity to the Island from the mainland.

And in July I visited the Don KRC smallgoods plant in Castlemaine, one of the largest employers in the region. They have built the kind of plant we are going to see more and more of, with smart co-generation technology to provide both heat and power

These are just three examples of the many exciting projects underway.

The Government's clean energy plan is going to drive similar investment around the country - and it's going to drive the research expertise and infrastructure to underpin it.

Today I will outline why Australia needs to transition to a clean energy future and how the Gillard Government's plan will get us there.

But first, why should we put a price on carbon?

Why price carbon?

For many Queenslanders familiar with this state's natural wonders - such as the Great Barrier Reef - the answer is simple. The consensus among the science community is clear - our climate is changing and human activity is causing it. Australia, and other polluting nations, must take action to cut carbon pollution if we are to prevent dangerous climate change.

Acting now may appear to be costly but in the longer term the costs of inaction will be greater. As we all know the more we delay action, the greater the costs we are imposing on current and future generations, in Australia and around the world.

We know that fair and effective global action to achieve ambitious emissions reductions is in Australia's national interest. We need to demonstrate that we are willing and able to do our part. The Gillard Government is committed to ambitious pollution reduction targets as part of global action, and is putting in place policies capable of delivering these targets.

The Government has developed a comprehensive plan to move to a clean energy future. Central to that plan is the introduction of a carbon price that will cut pollution in the cheapest and most effective way and drive investment in renewable energy sources such as solar, wind, geothermal and other technologies.

The Clean Energy Future Plan involves:

introducing a carbon price and returning every cent to assist households, support jobs and tackle climate change;

promoting innovation and investment in renewable energy;

encouraging energy efficiency; and

creating opportunities in the land sector to cut pollution and improve productivity, sustainability and resilience.

Releasing carbon pollution is currently free, despite the fact that it is harming our environment.

To tackle climate change, therefore, we need to correct the greatest market failure the world has ever seen.

Putting a price on carbon is the most environmentally effective and cheapest way to cut pollution. This is a fact that is well recognised by economists from around the world, and respected institutions such as the Organisation for Economic Co‑operation and Development and the Productivity Commission.

As we all know, a constraint on carbon pollution will drive innovation across the economy by:

finding new energy and carbon efficient ways of doing business;

investing in new low carbon products and processes; and

stimulating the scientific and engineering research that will provide all the energy that is needed to secure economic prosperity without carbon pollution.

Starting at a fixed price in 2012-13, and then moving to an emissions trading scheme, the carbon price will generate incentives to reduce pollution and invest in clean energy, breaking the link between pollution and economic growth. This is what eminent economist Sir Nicholas Stern calls the ‘new industrial revolution.'

Treasury modelling predicts that under a carbon price, renewable generation in Australia continues to grow strongly from 20 per cent in 2020 to around 40 per cent of total generation by 2050.

Support for jobs and competitiveness

But before I move on to talk about the bright future for clean energy in this country, let me briefly outline the carefully designed measures the Government will implement to support jobs and competitiveness as we move to a clean energy future.

These measures will ensure that Australia continues to experience strong jobs growth while at the same time providing incentives to cut pollution in our economy.

The ongoing Jobs and Competitiveness Program will provide over $9 billion in support over the first three years of the Carbon Pricing Mechanism, targeted at companies that produce a lot of carbon pollution but are constrained in their capacity to pass through costs in global markets.

Assistance will be provided to activities such as steel, aluminium, cement and flat glass manufacturing. Under this program, businesses producing over 80 per cent of the manufacturing sector's emissions are expected to be eligible for support.

Of course, the Jobs and Competitiveness Program is not the panacea to supporting manufacturing in Australia under a carbon price. It's essential that the Government assists manufacturing directly in improving energy efficiency and support research and development in low pollution technologies.

That is why the Government will introduce the $1.2 billion Clean Technology Program to help manufacturers invest in energy efficient capital equipment and low emissions technologies, processes and services. The Clean Technology Innovation Program will provide grants of between $50,000 and $5 million on a co‑investment basis to businesses in all industry sectors to support research, development and commercialisation of clean technology products.

Investment in Australia's renewable energy sector

But it is also essential that Government plays a part with the emergence of a viable and sustainable clean energy sector to ensure all Australians benefit from the new opportunities that will open up as we move to a clean energy future.

Developing our abundant renewable energy resources and investing in clean energy technology and innovation will present new growth opportunities for Australian clean energy businesses, with associated economic and employment benefits.

Internationally, research from the Pew Charitable Trusts indicates that clean energy investment in the G20 countries rose by 230 per cent between 2005 and 2009.

Under strong clean energy policies, $2.3 trillion could be invested globally in clean power assets over the next decade, offering companies and countries enormous potential to compete for investments, jobs and export markets.

The Government's plan for a clean energy future will help ensure Australia is positioned to take advantage of this investment opportunity and create the low pollution jobs for the future. Vital to this will be the new Clean Energy Finance Corporation and the Australian Renewable Energy Agency.

The Clean Energy Finance Corporation will be established to drive innovation through commercial investment in clean energy through loans, loan guarantees and equity investments.

Investments will focus on renewable energy, energy efficiency and low emissions technologies, and the transformation of existing manufacturing businesses to re-focus on meeting demand for inputs for these sectors. The Corporation's investments will be divided into two streams, each with half of the allocated funding:

the renewable energy stream will invest in renewable technologies, which may include geothermal and wave energy and large scale solar power generation; and

the clean energy stream will invest more broadly; for example, in low-emissions cogeneration technology, but will still be able to invest in renewable energy

A new, independent statutory body, the Australian Renewable Energy Agency, will be created to coordinate around $3.2 billion in existing grant funding programs supporting research, development and demonstration of new renewable energy technologies.

Together, these programs will drive the biggest expansion in the clean energy sector in Australia's history, building a critical mass of renewable energy, energy efficiency and low‑emissions generation projects. Our modelling shows that the Government's renewables policies including the new Australian Renewable Energy Agency and the Clean Energy Finance Corporation will leverage around $100 billion in investment in the decades to come.

These new measures build on the Government's strong record of delivering support to renewables, support that is fundamental to Australia's transition to cleaner baseload energy sources. Government support will fill gaps in the market and drive down costs.

One of the key Government achievements in the development of new renewable energy technologies is the Solar Flagships program, and in particular the Round 1 funding which has leveraged over $2 billion in investment. The Government is contributing $300 million to the Moree Solar Farm consortium, led by BP Solar, which will build a 150 megawatt solar power plant.

In Chinchilla here in Queensland, the Government is contributing $464 million to building a 250 megawatt solar thermal gas hybrid power plant. When complete, it will be the largest solar power plant in Australia and, if operational today, would be the largest solar power plant built on a single site in the world.

The Government also supports the deployment of market‑ready renewables through the Renewable Energy Target. The RET is designed to deliver on the Government's commitment that the equivalent of 20 per cent of Australia's electricity comes from renewables by 2020 and is expected to drive an estimated $20 billion in renewables investment by the end of the decade. The Government remains committed to the RET.

Opportunities for Australia

Moving to a clean energy future will provide new economic opportunities for Australia - and its businesses and employees. Opportunities will open up in existing businesses. Jobs will be created in clean industries such as renewable energy generation, carbon farming and sustainable design, to name just a few.

The Government recognises that it is now time to act to harness these opportunities. We recognise that if Australia fails to enact this vital reform, the costs will only become greater in the years ahead. Undertaking this reform will ensure Australian businesses remain globally competitive in the decades ahead.

Around the world we are seeing strong growth in the renewables industry on the back of strong climate change policies.

This was highlighted by European Commission President Jose Barroso on Monday in Canberra, who in a joint press conference with Prime Minister Gillard said that:

"Australia's decision to put a price on carbon emissions is, in our view, an important step both environmentally and economically, because it is in our European experience the most cost-efficient way to reduce emissions and also a great green business opportunity."

Whilst the federal Opposition may seek to talk down the Australian economy and Australian manufacturers, the opportunities for Australians in clean industries should not be played down. The international experience speaks for itself.

Germany is seeing a rapid expansion in its solar and wind industries, and the number of people employed in the renewables industry has doubled over the past five years.

Similarly the Confederation of British Industries, the British equivalent to the Australian Chamber of Commerce and Industry, notes that the green economy will stimulate investment of around $300 billion in the United Kingdom energy sector alone.

Closer to home, Australia's largest trade partner and the world leader in renewables - China - has placed the industry as a strategic priority in its next Five Year Plan. This action alone is going to lead to strong growth in renewables in the years ahead.

Of course, whenever government pursues reform there will always be naysayers warning of dire consequences for jobs, business and industry.

Across the Tasman, naysayers were out in force in the lead up to the introduction of the New Zealand emissions trading scheme. But what has happened? There has been a surge in renewable energy investment, even though their scheme doesn't have any complementary measures to specifically encourage new renewables investment.

Australia cannot afford to be left behind as the green economy takes off. You in this room are going to be important partners to the Government in ensuring this does not happen.

Conclusions

Over the coming years, Australia will continue to change, adapt and grow. The Gillard Government's plan for a clean energy future sets in train a fundamental economic transformation that will increase prosperity while it reduces carbon pollution.

Investment and technological development will be strengthened, particularly in key sectors like renewable energy - and that means new jobs in R&D, manufacturing, construction and maintenance. And our environment will benefit by sustained reductions in carbon pollution.

Importantly, we will secure a clean energy legacy for our children and their children.

This is good policy: it is equitable, it is timely, it is comprehensive and it is effective.

While the Opposition is fixed on a campaign of negativity and misinformation, the Government intends to bring about this key economic reform. Legislation will be introduced this month. It will become law. Australia's carbon price will commence next year and our prosperity and way of life will continue to improve.